Tuesday, February 02, 2016

We love how Uber claims price cuts stimulate earnings

We smell deception. Uber claims that "season price cuts means more demand, which results in significantly more trips for our driver partners, and more earnings for every hour on the road".

What price cuts are really doing is stimulating more safe ride fees for Uber. At $1.35 per rider, price cuts generate millions in safe ride fees. It is also allowing Uber to push out the competition by making trips much cheaper than any other car services can afford to offer.

It doesn't make sense to drive for extremely cheap prices. Uber will continue to show confidence in these price cuts, that we can expect them to stand by their belief that reducing prices will stimulate business.

What gets us angry is that hourly earnings have significantly dropped every week since Christmas. Weekly earnings gotten so bad that Uber's cut is larger than Partner payouts.

In the above statement, Uber means they will stimulate more business to get additional $1.35 safe ride fees and still maintain their revenue based on Partners losing. If clients split the trip 2-3 ways, Uber will tack on $1.35 for each new client. If a trip typically cost $15, expect this price to increase $2.70 to add two new riders on the split.

Any smart person knows that reducing the cost of anything will require additional effort to make up this difference. Uber drivers are not products sitting on shelves waiting to be sold. They are real people using real vehicles to provide a service. When Uber manipulates the bottom line, they influence the lives of their valuable driver pool.

The following is a Partner statement over the past 5 weeks. As can you see, these unappealing earnings are after all fees and deductions. Tell us if you can survive on this low pay?

The main reason the driver is not as effective now as during the holiday season is because there are far too many minimum trips following price cuts. After Uber fees and safe ride fees, this driver will get only $3.20 per trip. The 8 trips below made Uber $10.80 in safe ride fees and $5.60 in Uber fees. The $4 fee is a cancellation, which earned the driver more without driving client rather than driving them. Driver net pay is $26.40. Uber cut is $16.40. 

Total pay for these 8 rides before any deductions is $42.80. The driver netted $26.40, 61% of the cost of total fares. At this pace, driver is only receiving 61% of all fares making minimum fares. Before price cuts, half of these trips were $7-$8 trips. If client elect to split fares, then Uber makes another $1.35 per new rider added into the split. 

Longer trips are scarce now, but taking long trips mean far less money. From 2013 to now, the cost of a long trip has reduced almost 70%. It is not a good time to be working as a ridesharing driver. Stick with your day job, forget about taking the leap to convenience. 

The best answer on these current pay cuts is from an Uber driver claiming they must work double the time and put in double the effort to make what they once earned working two-thirds of the hours. This Uber driver is telling the truth. In order to make what you earned at 60 hours will require you to now work 85-90 hours. If you worked 40 hours, now you need to work 60 hours to make the same money. if you drive more hours, you spend more on fuel. Furthemore, you put additional wear and tear on your vehicle, accelerating the need to get maintenance and repairs performed on your vehicles. 

It is obvious reducing prices translate into taking more minimum fares, thus increasing Uber's stake of the total trip cost. Too many minimum fares give Uber almost 40% of trips. In order to be effective as an Uber driver, you need longer trips to eliminate pickup travel time. Minimum trips use up too much time and this influences driver earnings. Instead of taking 2-3 good trips per hour, drivers are now making 4 minimum trips per hour. Uber is gaining a larger share of these earnings.  

Airport trips that are close in proximity eat up a large chunk of earnings. Take an airport trip that cost $13; you will see only 50-55% of this fare. After airports fees, Uber fees and safe ride fees are deducted, this leaves the driver with half the fare. Taking close airport trips is a poor strategy to make a decent living as a ridesharing driver. 

You won't be successful driving clients that are staying at hotels next to any airports. Uber needs to set a minimum cost on airport rides. It's unfair to expect Uber drivers to receive a $4-$6 fare after completing an airport trip. It is better to get a cancellation fee than to make any airport trips 7 miles or less. Minimum trips, once decent trips, are a cancer to ridesharing. Cutting rates undermined decent paying trips, lowering them to minimum-priced rides. 

The best trips are longer trips that don't involve bridge tolls and no airport fees. Depending on commission share, drivers will make nearly 74%-79% of the total fare. Drive in places where you are further away from any airports and away from bridges that require toll charges to enter city. 

Clients hold out on surge pricing. In the past, clients requested surged rides at a higher frequency. As you can see in Partner statements, surge pricing is becoming much less than the past few years. Surge pricing once made Uber a great platform to earn money. 

Perhaps, Lyft is now the best driver platform. There is no comparison between these two ride companies, Lyft drivers are winning with higher priced rides and better weekly payouts. Lyft riders are loyal to Lyft. They accept that trips will start upon arrival, even if the pickup address is wrong. We believe Lyft is so confident in their software that riders won't be plotted miles away.  

If Uber charged clients once a driver arrived at a so-called pickup address, clients would be losing large amounts of money. Pin drops and wrong addresses account for lost driver earnings. Clients are known to be several blocks, several miles and even several cities over. In one extreme case, an Uber client somehow requested a Napa driver to make a pickup at LAX. How did Uber allow this ride request to happen? 

Uber drivers are barely earning better income. They are not completing the same number of trips. They make much less money. These drivers are working less hours, resulting from lower-priced fares discouraging them to get on the road. On nights where minimum fares are common, drivers lose motivation and go offline. 

Uber spokespeople definitely understand what drivers must deal with day-in, day-out. Most of them should be required to drive on the road for one week to emphasize with drivers. They have no clue how clients treat drivers. Please gain some experiences before making ineffective statements. 

The truth is that drivers are making less money. All drivers need to do is compare Uber Weekly Statements from before price cuts to present time. These stats show weekly earnings before all deductions. It's not worth making $10 per hour after all deductions. Drivers once earned $100 on one long trip and/or surged trip. 

Weekly statements will tell the truth of how many overall trips the top drivers are completing and reveal hourly earnings. We never understand why Uber continues to release statements claiming drivers will earn more money taking more trips. Drivers are making way less money. If they want to restore their past earnings, they must overcome boredom making much cheaper trips with no tips included. According to many Uber clients, Uber tells them to not tip, as it is already included in trip cost. This is another manipulation to help clients and hurt drivers. 

It is more like drivers will help us increase overall trips, which we vastly need to look good to our investors. Higher frequency of trips will make us more money (safe ride fees). However, our drivers (Partners) will earn less but we won't tell them this to maintain their motivation. We will offer them hourly guarantees; however, we will disqualify them using petty terms and conditions. Rathern than measure overall stats, we will use time increments as a way to disqualify them in that time slot. 

Great job Uber for not having the backs of your drivers. Uber, you've disappointed your Partners. Drivers, you better work harder instead of smarter to earn less. That is the Uber way!